Hamburger restaurant brands still remain a safe tenancy bet as consumers are attracted to the feel-good comfort food pleasures that burgers provide. The burger restaurant industry is expected to grow by almost 16% this year alone. The industry has expanded to include higher-end brands that produce gourmet offerings, which appeal to the upper middle-class base. There are also value-driven hamburger tenants, niche burger chains and everything in between. Many hamburger tenants are reducing their square footage needs to provide smaller dine-in spaces, while also offering more drive-thru lanes and pick-up window capabilities. Look for standalone drive-thru units in family-friendly suburban regional centers and strip malls to be favored. Some burger chains seek inline and end cap spaces in close proximity to multifamily developments, medical offices and colleges. Look for brands such as Checkers/Rally’s, SONIC Drive-In, Smashburger, Shake Shack, BurgerFi, Jack in the Box, MOOYAH, Killer Burger, Whataburger and In-N-Out Burger to expand throughout the country, especially as Burger King, Five Guys, McDonald’s and Wendy’s continue to focus on overseas growth.
The Checkers chain of quick-service restaurants (including its locations under the Rally’s name) has very aggressive expansion plans and hopes to open between 200 and 230 new units per year over the next five years. New units will be in regions where the brand already has a presence, including Texas, California, Nevada, Arizona, Illinois, Indiana, Iowa, Arkansas, West Virginia, Virginia and the Carolinas. The brand is well positioned for growth because of its $20M investment this year from its owner, Oak Hill Capital Partners IV, in addition to its pre-pandemic multiple drive-thru/non-dine in configurations that have attracted a 25% increase of new franchisees in 2020. Checkers/Rally’s, which is eager to take over vacated spaces from drive-thru brands affected by COVID-19, seeks approximately 1,000-s.f. units in standalone pads in shopping centers near either office developments or major leisure/tourist destinations such as beach resorts, amusement centers, zoos and sports venues. Preferred co-tenants include convenience stores, such as Circle K and pharmacies such as CVS Pharmacy. Potential sites should have a population of 50,000 within three miles and 25,000 vehicles per day. The brand is in the process of converting its current units to incorporate a drive-thru lane solely for online orders. Checkers/Rally’s is known for its value-driven menu featuring seared burgers, seasoned fries and milkshakes.
The SONIC Drive-In restaurants weathered the shutdown storm well because its units are geared toward drive-up carhop-style service that appeals to families wanting to dine-out safely. The restaurant chain is especially keen on conversions, including former banks and fast-food brands, such as Burger King. SONIC, which was acquired by Inspire Brands in December of 2018, expects to open about 45 to 55 new units per year over the next three years. Look for Southern California, Texas, Louisiana, Nebraska, Kansas, Oklahoma, Alabama, Tennessee and Delaware to be targeted. Beyond 2024, expect Midwest and Northeast states to be eyed for growth, including Minnesota, Massachusetts, New Jersey, New Hampshire, Maine and Illinois. SONIC is especially eager to expand into more rural areas with a population density of about 10,000 within a one-mile range. The brand can accommodate many different real estate spaces, but generally seeks approximately 30,000 to 44,000 s.f. of lot space, with its main restaurant building taking up between 1,150 and 1,600 s.f. Power centers, lifestyle centers or neighborhood strip centers are sought after. Grocery co-tenants are preferred, such as Kroger, and space should be in an area with a strong concentration of both residential and commercial, with medical buildings and schools nearby. SONIC, which serves burgers, fries and hot dogs, is especially known for its vast slush drinks menu, as well as its snack offerings, including tater tots, popcorn chicken and mozzarella sticks.
Smashburger has a long-term goal of opening between 35 and 45 new units per year over the next 15 years, aided by the brand’s acquisition by Jollibee Foods Corporation in December 2018. Look for Smashburger to especially focus on locations in heavily populated suburban sections on the perimeters of Washington, D.C., New York City, Brooklyn, N.Y., Northern and Central New Jersey, Houston, Chicago, Los Angeles, and Orange County, Calif. The burger chain also expects to take advantage of vacant restaurant spaces in urban metro areas. The restaurant seeks freestanding units, end caps and inline spaces with a patio, in the 1,800- to 2,500-s.f. range, in power centers as well as neighborhood and regional strip centers. Seating should be able to accommodate between 40 and 70 customers and provide a minimum of 16 parking spaces.
Population within three miles of space should be 75,000, with an average income of more than $60K. Favored co-tenants include big-box brands, such as Costco or Best Buy. Smashburger experienced double-digit increases during the last eight months of 2020. The chain will be building more drive-thru units and installing food lockers that will keep food heated until the customer picks it up. Smashburger is known for smashing its angus beef on a flattop grill to seal in the juicy flavors.
For its future growth plans, Shake Shack will be entering the new states of Oregon and Indiana, as well as increase its expansion into Colorado, Tennessee, Minnesota, California, Texas, Florida, Pennsylvania and New Jersey. The brand, while still opening urban units, is also seeking sites in suburban destinations outside of major metropolitan hubs, such as its expected openings in Beaverton, Ore., and Lone Tree, Colo., this year. The restaurant chain anticipates opening up to 40 new units in 2021, and up to 50 new units in 2022. Expect Shake Shack to open about 30 to 35 new units per year in both 2023 and 2024. Shake Shack, whose shares went up 36% in 2020, seeks out end cap and inline space that averages 3,500 s.f., with seating capabilities for up to 100 customers. Top-tier real estate spaces, especially high-end lifestyle centers within affluent suburbs, with luxury co-tenants such as Lululemon, will be desired. The chain looks for ground level mixed-use space, such as its unit set to open in late 2021 in the McEwen Northside development in Cool Springs, Tenn., outside of Nashville. The brand is also interested in standalone pad sites in areas with heavy retail and multifamily developments, preferably with a high concentration of millennials. Up to eight of its new units this year will be drive thrus, a new configuration for the brand, starting with its 3,300-s.f. double drive-thru standalone pad unit expected to open this summer in Orlando, Fla., within the new mixed-use development called Vineland Pointe, developed by Williams Company, that also houses The Cheesecake Factory and a Target. Shake Shack will also develop new units, and renovate many of its existing units, to include drive-up windows. The first renovated restaurant debuted in December at its 3,638-s.f. standalone pad unit in the upscale outdoor regional shopping center, Mellody Farm, in Vernon Hills, Ill., with co-tenants that include REI, Athleta and Whole Foods Market. The premium burger and shake brand introduced Korean-style fried chicken to its menu in January for a limited time.
BurgerFi is geared up for aggressive expansion thanks to its acquisition by OPES Acquisition Corp in December, as well as its becoming a publicly traded company that same month. The burger chain hired the former CEO of Burger King in January to oversee its growth. BurgerFi anticipates opening up to 35 new units this year and up to 45 units in 2022. Expansion will be focused in the South and the Northeast/Mid-Atlantic region, plus the brand will eye growth in the West. Look for Atlanta, Richmond, Va., Charlotte, N.C., Mobile and Montgomery, Ala., as well as Nevada and Arizona to be targeted, in addition to more units within its home base of Florida. BurgerFi will also test markets in the North, such as Chicago, via ghost kitchen partnerships with both Reef Technology and Epic Kitchens. The restaurant ideally seeks either inline or standalone pads with patio space, between 1,000 and 3,000 s.f., in lifestyle centers and regional centers in upscale suburban markets for its health-minded fast-casual units. The brand also introduced its first drive-thru unit in December, in a 3,138-s.f. former Back Yard Burgers standalone pad in Lexington, Ky., and expects to continue opening more such units in the future. Preferred co-tenants include brands that attract wealthier millennials, such as electronics stores, including T-Mobile.
Jack in the Box, which has not had major expansion for the past 10 years, hinted that major U.S. growth may be on the horizon, thanks to a new CEO hired in 2020 who oversaw the mutually beneficial lawsuit settlement between the franchisees and the brand. With renewed confidence, Jack in the Box franchisees are once again eager to open new units, and Jack in the Box is also hiring a CFO and a chief marketing officer to join forces with the new VP of franchise and corporate development hired in October to oversee new unit growth. Expect the brand to open between 25 and 30 new units this year, with the potential of opening up to 50 new units in 2022, and possibly up to 75 new units per year in 2023 and beyond. States expecting to see growth include the Carolinas, Colorado, Georgia, New Mexico, Utah, Kansas, Illinois and those in the Northwest. The brand looks for corner space, in the 2,400- to 3,100-s.f. range, in highly visible and easily accessible pad areas in regional neighborhood shopping centers with grocery anchors, such as Albertsons, on busy urban and suburban retail streets. Jack in the Box is also introducing new flexible prototypes that can incorporate drive-thru only buildings, as well as end cap and inline spaces, the latter of which will be considered in high-density population areas with a large number of walk-up window food tenants. Residential population within one mile of the site should be 15,000 to 20,000. Jack in the Box saw its same-store sales increase 12.5% for its first quarter in 2021 compared to a year ago, and the chain has found success beyond its burgers, especially with tacos.
Whataburger expects to open approximately 20 new units per year over the next three years, with immediate growth into the new regions of Kansas City, Mo., and Nashville, Tenn., as well as continued growth in Alabama. Beyond 2024, the brand may also begin expansion into Kentucky, the Carolinas and Colorado.
Whataburger is prepared for new unit growth, thanks to its majority stake acquisition by BDT Capital Partners in 2019, the same equity fund that has also invested in Einstein Bros. Bagels, Krispy Kreme and Caribou Coffee. The chain also reintroduced its franchising efforts in 2020 after a 20-year hiatus. Whataburger looks for standalone pad space in the 3,500-s.f. range in smaller to mid-sized suburban communities, in strip malls and power centers on main thoroughfares. Co-tenants sought out include other restaurant brands, such as Subway and Panda Express, as well as big-box tenants, including Walmart.
MOOYAH is anticipating opening approximately 15 new units per year over the next 10 years. Markets targeted for growth include Las Vegas, Phoenix, Orlando and Tampa, Fla., Nashville, Atlanta, Raleigh-Durham, N.C., Richmond, Va., and California. Immediate growth will be focused on Texas, specifically Dallas/Fort Worth and Houston. MOOYAH seeks inline and end cap space between 1,800 and 4,500 s.f. in higher income suburban areas with a large number of families, ideally in regional shopping centers with co-tenants including a strong anchor, such as a Trader Joe’s, as well as other fast-casual food tenants, such as Pick Up Stix. Sites should be close to schools, recreational parks and churches. Though MOOYAH features a sit-down, fast-casual dine-in configuration, the brand will test out drive thrus in some California units that will feature new kitchen equipment expected to reduce wait times. The brand, which just hired a new franchise operations manager in early 2021 in anticipation of its growth, is known for its high-quality gourmet Angus beef burgers with buns baked in-house daily, as well as its 100% ice cream shakes.
Portland-based Killer Burger expects to open 10 to 15 new restaurants per year over the next five years. After increasing its presence in both Oregon and Washington, the brand will then target Boise, Idaho, Reno, Nev., and Denver. The burger chain seeks inline or end cap space, between 2,500 and 3,200 s.f., in urban street-front neighborhoods, including ground-floor mixed-use spaces, as well as suburban regional centers, ideally in close proximity to colleges. Preferred co-tenants include other fast-casual dining brands, such as MOD Pizza. The burger chain, known for its “rock and roll” themed interior, sells craft beers and ciders, as well as innovative burger combinations, including its Peanut Butter Pickle Bacon burger.
In-N-Out Burger expects to open approximately 10 to 15 new units per year over the next three years, targeting new territories within Colorado and Idaho, and will continue its growth within Portland, Ore., and possibly enter Houston. Beyond 2024, In-N-Out will likely be eyeing expansion into Utah, New Mexico and possibly Kansas. The burger chain favors units in suburban neighborhood sites, in the 3,500- to 4,000-s.f. range, with a minimum lot size of 45,000 s.f. in standalone corner lots within regional shopping centers. Spaces near freeway entrances and exits, as well as sites at major intersections with a heavy retail presence, are also sought after. Trade area should have a population of approximately 60,000, with a minimum household income of $45K. Space for purchase, or leases with an option to purchase, are preferred. In-N-Out keeps its costs down for its high-quality non-frozen beef burgers by limiting its menu, offering solely soft drinks, fries, burgers and shakes.
